FTW: In an industry where mergers and acquisitions are the order of the day, is there still room for an independently-owned line like DAL? DAL: As a family-owned company we have always been a target of takeover bids, but it’s something in which we have never been interested. We are a results-orientated company unlike many other lines who want to grow at any cost to get the volumes and increase their percentage in the various markets. That is something we have never been interested in doing – we believe our formula works. My grandfather bought the line 70 years ago, but as a company we are in our 117th year of dealing with Africa, from the imperial days until now. FTW: How have you managed to stay afloat when so many others have had to go the merger route to survive? DAL: Our philosophy has always been to stand on several pillars. The liner side is very important to us. But we are also involved in chemical tankers, a market that has developed totally differently from the liner side, as well as the bulk market which is doing very well. We try to spread the risk through diversification. FTW: Have volumes grown over the past year? To what extent is the growth in Far East sourcing affecting volumes to South Africa? DAL: The Europe - South Africa trade grew by 4% but overall overseas trade grew by 8% and a big percentage of the difference comes from the East. A major contributor southbound is the motor industry, which has been the driving force for growth – 40% of our capacity is taken up by automotive. Northbound dry volumes have been somewhat disappointing with the stronger rand playing a detrimental role. But reefers have made a positive contribution – it’s been a good start to the current season. That was the driving force for an increase in the frequency of our intermediate service with our partners. We operated it for a year on a fortnightly basis but have increased it to weekly. In addition, last year we brought in new ships with increased plug capacity. FTW: How, if at all, has the change in the SAECS consortium to a vessel sharing agreement affected you and your customers? DAL: The new vessel sharing agreement means each party is responsible for its own marketing and costs, merely sharing the capacity of the vessel. It’s not as close as it used to be and is ultimately to the advantage of the shipper. There is no longer a conference tariff or surcharge – the competition board requires that there is no communication between the partners on commercial issues. But from an operational point of view the customer enjoys the same service. FTW: What about the level of rates? Have rates dropped northbound because of the volume decrease? DAL: Freight rates are an indicator of supply and demand as well as the cost structures on individual trades, so shippers should not compare one trade with another. South Africa is a long way from Europe and the vessels we operate on the trade are determined by the ports. That means our economies of scale are in direct relation to the size of the vessels. Another factor at the moment is the relatively high bunker prices. We operate the ships virtually continually at maximum speed because we are losing time due to port congestion, waiting for berths in Durban. This is something that has to be factored into our costs and the rate we are able to offer the shipper. In addition, southbound loads are dominated by dry cargo which means that jointly the SAECS lines have to reposition around 1200 empty 40 foot reefer containers a week southbound for the reefer loads from South Africa. FTW: What about congestion in SA ports? DAL: Cape Town and Port Elizabeth are dominated by the weather which we can’t change, but Durban is a structural problem. However, our understanding is that the goodwill from Sapo is there to make the changes and improvements required. And everyone is looking towards Coega which could be an option when it comes on stream. We did consider Maputo for our intermediate service but at the moment it’s not an option for us. Congestion is however a global issue and ports like Rotterdam are a big problem. FTW: How does this affect the integrity of your schedules? DAL: We’re working on it all the time, but speeding up vessels affects the bottom line. The bunker consumption of a vessel goes up exponentially once you move up from 22 knots to 24.5, but we have taken on that extra expense to maintain our schedule. The main problem is the reefer season which is also the windy season – but we’re trying to use the two weekly services to optimise all the time and cover all ports where necessary. FTW: Any service changes in the offing? DAL: As a first step we increased the intermediate service from fortnightly to weekly. This was a major decision because of the additional vessels – seven ships instead of four. We also call at East London which is very important for the automotive industry and we are always looking at how to optimise between the intermediate and our main service in terms of ports of call. We will be looking again at the size of the vessels on the intermediate service and whether we have sufficient capacity and northbound reefer plugs. If the volumes develop southbound and northbound we could consider increasing the vessel size. These are all possibilities. But on the main service there is very little possibility of change. FTW: What is the outlook? DAL: The main economies involved are Germany and SA. Germany has a good growth rate at the moment as does SA. That will be reflected in the volumes being moved so we are quite optimistic. From a company perspective we are very focused on Africa and the Indian Ocean Islands and have just started a new service with CMA-CGM from Europe via IOI to Australia and New Zealand returning via Indonesia, Malaysia, India and back through the Red Sea.
